The Auto Industry Does Potentially Have A Sales Crisis Coming With EVs — But It’s Not What You Think

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There’s been a lot of incorrect, misinformed hype in the past year or two about EV sales. EV sales growth had exploded. Then the sales growth slowed down a bit, but EV sales were still growing. Yet, many people — from CEOs in the industry to media headline writers to normal folk — made it sound like EV sales had crashed and people didn’t want them.

So, the good news is that EV sales do keep growing, in some regions faster than in others, but almost everywhere.

However, there is potentially a long-term sales demand concern for the auto industry when it comes to EVs. A reader, Charlie Richmond, recently pointed it out. “We are keeping our Teslas longer because the design is not aging and neither are the cars — they have cost us literally nothing to run and are good as new, even when they are 10 years old or more. In Vancouver, used Tesla prices have not crashed because there are so many of them, everyone knows how good they are.”

It’s a good point. If electric cars are more reliable, which they are, and last longer — or are “like new” for longer — then automakers could struggle to find as many new car buyers as in the past. Why buy a new car when your 5-year-old car feels like new?

That said, there are constant upgrades to car technology, vehicle design, etc. There’s also wear and tear on the seats, console, screen, steering wheel, etc. So, there are reasons to buy a new car every few years just as there have been for ages — if that’s the market you’re in. The majority of people buy used cars, not new ones. It’s particularly richer people who buy new cars, and long-term reliability may not be the most important selling point for the core of the market. It’s more of what I wrote above — wanting the newest, hottest, nicest vehicle. That said, there are certainly some new-car buyers who care a lot about that, and for a reason, because there are people who keep their cars for 10+ years (I intend to be one of them).

Also, if older cars are lasting longer thanks to the greater reliability of electric powertrains, there may be less demand on the used car market, which could hurt resale value, which can delay new car purchases from people who don’t like seeing a low trade-in value on their existing car.

So, how much will automakers actually take a sales hit? It’s hard to know. However, it seems it will become a factor to some degree.